ACIT, Jaipur V. ASHOK PARNAMI, Jaipur

ITA 45/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5392 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY MALIK CIT DHK
• Assessee Lawyers: MADHUKAR GARG
• Keywords: Depreciation; Onus to prove
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K YFYR DQEKJ] U;KF;D LNL; BEFORE: SHRI VIKRAM SINGH YADAV, AM & AND SHRI LA LIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO.45/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 ACIT CIRCLE-5, JAIPUR CUKE VS. SHRI ASHOK PARNAMI, 314 ADARSH NAGAR, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABPPP 0203P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ C.O. NO.14/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 SHRI ASHOK PARNAMI, 314 ADARSH NAGAR, JAIPUR CUKE VS. ACIT CIRCLE-5, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABPPP 0203P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MADHUKAR GARG (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALIK (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15.03.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26 /04/2016 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OB JECTION BY THE ASSESSEE ARISING OUT OF THE ORDER OF THE LD. CIT(A) -2, JAIPUR DATED 24.11.2013. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPE AL: ITA NO.45 & C) NO. 14/JP/15 THE ACIT, CIRCLE-5, JAIPUR VS. SHRI ASHOK PARNAMI, JAIPUR 2 (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO TRS. 1,49,215/- AS AGAINST THE ADDITION OF RS. 18,03,157/- MADE BY THE AO U/S 43B BEING SERVICE TAX NOTWITHSTANDING WITH THE FACT THAT SER VICE TAX LIABILITY PERTAINS TO A.Y. 2020-11. (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTING OF RS. 2 9,71,524/- AND RS. 13,16,375/- DISALLOWED BY THE AO U/S 43B BEING SERV ICE TAX DISALLOWED IN A.Y. 2009-10 & 2020-11 (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANC E TO 5% AS AGAINST DISALLOWANCE @ 10% MADE BY THE AO OUT OF REPAIRS & MAINTENANCE, GENSET, RUNNING & REPAIRS, MISCELLANEOUS, STAFF WEL FARE AND ENTERTAINMENT EXPENSES. IN ITS CROSS OBJECTION, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: (1) THAT THE LD. CIT(APPEALS) HAS ERRED IN SUSTAINING D ISALLOWANCE OF RS.3,26,604/- BEING 10% OF THE EXPENSES CLAIMED UND ER THE HEAD TELEPHONE, CONVEYANCE , CAR EXPENSES, PETROL EXPENS ES AND DEPRECIATION ON CAR. THE DISALLOWANCE SUSTAINED IS UNJUSTIFIED AND EXCESSIVE. (2) THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING A DISAL LOWANCE OF 5% OUT OF TOTAL EXPENSES OF RS. 27,27,748/- UNDER THE HEAD R EPAIRS AND MAINTENANCE EXPENSES. GEN. SET RUNNING AND REPAIR S, MISCELLANEOUS EXPENSES, STAFF WELFARE EXPENSES, FESTIVAL AND ENTE RTAINMENT EXPENSES. THE DISALLOWANCE SUSTAINED IS UNJUSTIFIED AND EXCES SIVE. 2. REGARDING GROUND NO.1 OF THE REVENUE, THE ASSESS ING OFFICER HAS DISALLOWED SERVICE TAX OF RS. 18,03,157/- WHICH HA S NOT BEEN PAID TILL THE DUE DATE OF FILING OF RETURN OF INCOME. THE APPELLANT H AS SUBMITTED THAT OUT OF THE ABOVE AMOUNT, HE HAS RECEIVED FROM HIS CUSTOMERS, SERVICE TAX ONLY TO THE EXTENT OF RS. 1,49,215/- AND THEREFORE PROVISIONS OF SECTION 43B ARE ATTRACTED ONLY TO THE EXTENT OF RS 1,49,215 AND NOT TO THE EN TIRE AMOUNT RS. 18,03,157/-. 2.1 THE LD CIT(A) HAS GIVEN HIS FINDINGS AS UNDER: THIS ISSUE ALSO AROSE IN THE CASE OF THE APPELLANT IN A.Y. 2005-06 AND A.Y. 2009-10 WHEREIN THE CIT(A)-II, JAIPUR HAS ALSO FOLLOWED THE RATIO OF THE ABOVE DECISIONS THAT THE LIABILITY TO PAY SERVICE T AX DOES NOT ARISE BEFORE THE PAYMENT IS RECEIVED FROM THE CUSTOMERS. THE APPELL ANT HAS CLAIMED THAT HE ITA NO.45 & C) NO. 14/JP/15 THE ACIT, CIRCLE-5, JAIPUR VS. SHRI ASHOK PARNAMI, JAIPUR 3 HAS NOT RECEIVED PAYMENT FOR SERVICES OF RS. 16,53, 942/- (RS.18,03,157/- RS.1,49,215/-) AND THEREFORE, THERE WAS NO LIABILI TY TO PAY SERVICE TAX IN RESPECT OF THIS AMOUNT. IN VIEW OF THE ABOVE DISCUSSION A ND FOLLOWING ABOVE DECISIONS INCLUDING THE DECISION OF THE ITAT JAIPUR AND CIT(A )-II, JAIPUR IT IS HELD THAT APPELLANTS LIABILITY TO PAY SERVICE TAX ARISES ONL Y AFTER RECEIVING PAYMENT AND THEREFORE SERVICE TAX ON THE SERVICES FOR WHICH PA YMENT HAS NOT BEEN RECEIVED WILL NOT BE LIABLE FOR DISALLOWANCE UNDER SECTION 4 3B. SINCE APPELLANT HIMSELF ADMITTED THAT HE IS LIABLE TO PAY SERVICE TAX BEFOR E THE DUE DATE OF FILING RETURN ON AN AMOUNT OF RS. 1,49,215/-, ADDITION MADE BY TH E AO U/S 43B IS CONFIRMED TO THIS EXTENT. FOR THE REMAINING DISALLOWANCE OF RS. 16,53,942/- , THE ASSESSING OFFICER IS DIRECTED TO VERIFY WHETHER APPELLANT HAS RECEIV ED PAYMENT FOR SERVICES RENDERED. IN CASE OF NON RECEIPT OF PAYMENT FOR SE RVICES, THE APPELLANT IS NOT LIABLE TO PAY SERVICE TAX, AND THEREFORE, DISALLOWA NCE U/S 43B TO THE ABOVE EXTENT IS DIRECTED TO BE DELETED. 2.2 AT THE OUTSET, LD AR SUBMITTED THAT THE ISSUE I S SQUARELY COVERED IN FAVOUR OF THE APPELLANT IN ITS OWN CASE BY THE DECI SION OF THE COORDINATE BENCH IN ITA NO. 777/JP/2013 DATED 29.01.2016 FOR A.Y. 20 09-10. THE FINDINGS OF THE COORDINATE BENCH ARE AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE HAS NOT DEBITED SERVICE TAX IN P&L ACCOUNT, WHICH HAS BEEN SHOWN IN SERVICE TAX AC COUNT SEPARATELY. THE HONBLE HIGH COURT IN THE CASE OF CIT VS. NOBLE HEW ITT (I) (P) LTD. (SUPRA) HAS HELD THAT THE ASSESSEE HAS FOLLOWED MERCANTILE SYST EM OF ACCOUNTING AND COLLECTED SERVICE TAX. THE AMOUNT OF SERVICE TAX H AS NOT BEEN DEBITED IN THE P & L ACCOUNT AS ALSO NOT CLAIMED AS DEDUCTION, THE REFORE, AMOUNT COULD NOT BE DISALLOWED. FURTHER THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CALIBRE PERSONNEL SERVICES PVT. LTD.(SUPRA) BY CONS IDERING THE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. NOBLE HEWITT (I) ( P) LTD. (SUPRA) WHEREIN BOTH THE ISSUES I.E. SECTION 43B AND ISSUE OF MERCANTILE SYS TEM OF ACCOUNTING HAD ALSO BEEN CONSIDERED AND HELD THAT IN CASE OF ASSESSEE, SECTION 43B NO DISALLOWANCE CAN BE MADE. THE HONBLE SUPREME COURT HAS ALSO DI SMISSED THE SLP FILED BY THE DEPARTMENT IN THE CASE OF CIT VS. CALIBRE PERSO NNEL SERVICES PVT. LTD. (SUPRA). BY RESPECTFULLY FOLLOWING THE DECISION OF BOTH THE HONBLE COURTS, WE DELETE THE ADDITION CONFIRMED BY THE LD. CIT(A). 2.3 THE LD DR IS HEARD WHO HAS RELIED ON THE ORDER OF THE AO. ITA NO.45 & C) NO. 14/JP/15 THE ACIT, CIRCLE-5, JAIPUR VS. SHRI ASHOK PARNAMI, JAIPUR 4 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSES SEE HAS COLLECTED ONLY AN AMOUNT OF RS. 1,49,215/- TOWARDS SERVICE TAX AND T HE BALANCE MOUNT OF RS. 1,80,157/- HAS NOT BEEN COLLECTED BY THE ASSESSEE D URING THE YEAR. IT IS ALSO UNDISPUTED FACT UNDER THE SERVICES TAX LEGISLATION AS APPLICABLE FOR THE YEAR UNDER CONSIDERATION THAT LIABILITY TO PAY SERVICE T AX ARISES, AS AND WHEN THE SERVICE TAX IS COLLECTED FROM THE CUSTOMERS. IN TH E INSTANT CASE, THE ASSESSEE HAS ADMITTED THAT IT IS COLLECTED SERVICE TAX ONLY TO THE TUNE OF RS. 1,49,215/- AND DISALLOWANCE U/S 43B SHOULD THEREFORE BE RESTRI CTED TO THAT AMOUNT. FURTHER RESPECTFULLY FOLLOWING THE CO-ORDINATE BENC HS DECISION IN ASSESSEES OWN CASE FOR A.Y. 2009-10, WE CONFIRM THE FINDINGS AND DIRECTIONS OF THE LD. CIT(A) AND THE GROUND TAKEN BY THE REVENUE IS DISM ISSED. 3 REGARDING GROUND NO.2 OF THE REVENUES APPEAL, TH E LD.CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO VERIFY THE AMOUN T OF SERVICE TAX PAID BY THE ASSESSEE DURING THE YEAR WHICH RELATES TO THE AMOUN TS DISALLOWED U/S 43B IN EARLIER A.Y. 2009-10 & 2010-11 AND HAS BEEN SUSTAI NED BY THE APPELLATE AUTHORITIES. THE LD CIT(A) HAS FURTHER STATED THAT THE AMOUNT WHICH HAS BEEN PAID DURING THE YEAR IS DIRECTED TO BE ALLOWED AS D EDUCTION AS PER THE PROVISIONS OF SECTION 43B. WE DO NOT SEE ANY PREJU DICE OR LOSS OF REVENUE WHICH IS CAUSED BY VIRTUE OF THE SAID DIRECTIONS. THE AMOUNT OF SERVICE TAX WHICH HAS BEEN DISALLOWED IN EARLIER YEARS SHOULD B E ALLOWED ONCE THE APPELLANT HAS DEMONSTRATED THE DISCHARGE AND DEPOSI T OF THE SAID LIABILITY THROUGH APPROPRIATE DOCUMENTATION. WE SEE NO REASO NS TO INTERFERE WITH THE SAID FINDINGS AND DIRECTIONS OF THE LD CIT(A) WHICH IS HEREBY CONFIRMED. HENCE THIS GROUND OF APPEAL OF REVENUE IS DISMISSED. 4. REGARDING GROUND NO.3 OF THE REVENUE APPEAL AND THE CROSS OBJECTION NO.2 OF THE APPELLANT, IT RELATES TO DISALLOWANCE @ 10% MADE BY THE AO OUT OF REPAIRS & MAINTENANCE, GENSET RUNNING & REPAIRS, MI SCELLANEOUS, STAFF WELFARE AND ENTERTAINMENT EXPENSES. 4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL ON RECORD. WE SEE NO REASON TO INTERFERE WITH THE FIN DINGS OF THE LD CIT(A) WHICH IS REPRODUCED AS UNDER: I HAVE PERUSED THE FACTS OF THE CASE, ASSESSMENT O RDER AND APPELLANTS WRITTEN SUBMISSION. THE ASSESSING OFFICER HAS DISALLOWED 10% OF VARIOUS EXPENSES CLAIMED BY THE APPELLANT ON THE GROUND THAT NAME A ND ADDRESSES OF THE RECIPIENTS ARE NOT MENTIONED IN MOST OF THE VOUCHER S. THE ONUS TO PROVE ANY ITA NO.45 & C) NO. 14/JP/15 THE ACIT, CIRCLE-5, JAIPUR VS. SHRI ASHOK PARNAMI, JAIPUR 5 EXPENSES CLAIMED, IS ON THE APPELLANT AND IF APPELL ANT IS NOT ABLE TO PROVE HE SAME WITH NECESSARY EVIDENCES, ASSESSING OFFICER IS JUSTIFIED IN MAKING PART DISALLOWANCE OUT OF SUCH EXPENSES. IN EARLIER YEAR S ALSO SIMILAR DISALLOWANCE HAVE BEEN MADE. THE CIT(A)-II, JAIPUR, IN THE CASE OF THE APPELLANT FOR A.Y. 2009-10 (APPEAL NO.598/11-12) HAS UPHELD THE ABOVE DISALLOWANCE TO THE EXTENT OF 5% OF THE ABOVE EXPENDITURE. THE DECISIO NS RELIED UPON BY THE APPELLANT ARE NOT APPLICABLE IN THIS CASE SINCE ASS ESSING OFFICER POINTED OUT DEFECTS IN THE VOUCHERS. CONSIDERING THE FACTS OF THE CASE AND APPELLANTS SUBMISSION, THE DISALLOWANCE IS RESTRICTED TO5% OF THESE EXPENSES. THE BALANCE ADDITION MAY BE DELETED. THIS GROUND IS PARTLY ALL OWED. 4.2 THE GROUND NO.3 OF THE REVENUES APPEAL AND CRO SS OBJECTION NO. 2 ARE THUS DISMISSED. 5. REGARDING CROSS OBJECTION NO.1 WHICH IS REGARDIN G DISALLOWANCE OF TELEPHONE, CONVEYANCE, CAR EXPENSES ETC, THE CIT(A) HAS GIVEN HIS FINDINGS AS UNDER: I HAVE PERUSED THE FACTS OF THE CASE, ASSESSMENT O RDER AND APPELLANTS WRITTEN SUBMISSION. THE ASSESSING OFFICER HAS DISALLOWED 1 0% OF VEHICLES, TELEPHONE AND CONVEYANCE EXPENSES FOR WANT OF VERIFICATION AN D PERSONAL USE. THE AO MENTIONED THAT APPELLANT HAS NOT MAINTAINED CALL DE TAILS FOR TELEPHONE EXPENSES AND LOG BOOKS FOR VEHICLE USE AND THEREFOR E PERSONAL USE CANNOT BE DENIED/. FURTHER VOUCHERS FOR CONVEYANCE ARE SELF-M ADE AND NO VERIFICATION IS POSSIBLE. THE APPELLANT OBJECTED THE DISALLOWANCE O N THE GROUND THAT BOOKS OF ACCOUNTS AUDITED AND CONSIDERING THE NATURE OF APPE LLANTS BUSINESS, SUCH EXPENSES ARE NORMAL. HOWEVER, SUCH DISALLOWANCE HA VE MADE IN EARLIER YEARS ALSO. THE CIT(A)-II, JAIPUR IN THE CASE OF THE APP ELLANT FOR A.Y. 2009-10 (APPEAL NO. 598/11-12) HAS UPHELD THE ABOVE DISALLOWANCE O F 10% OF THE ABOVE EXPENDITURE. CONSIDERING THE ABOVE FACTS, I FIND T HAT DISALLOWANCE OF 10% OUT OF THESE EXPENSES IS REASONABLE AND ACCORDINGLY THI S DISALLOWANCE IS UPHELD. IF THE VEHICLES ARE CONSIDERED TO BE PARTLY USED FO R NON-BUSINESS PURPOSES THEN DEPRECIATION TO THAT EXTENT IS DISALLOWABLE UNDER S ECTION 38(2). SINCE IT IS HELD THAT VEHICLES WERE ALSO USED FOR PERSONAL PURPOSES TO THE EXTENT OF 10%, THE DEPRECIATION TO THIS EXTENT IS ALSO DISALLOWABLE AN D ACCORDINGLY THE DISALLOWANCE OF DEPRECIATION ON VEHICLES IS ALSO UP HELD. 5.1 WE SEE NO REASON TO INTERFERE THE SAID FINDINGS , HENCE THE SAME IS CONFIRMED AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ITA NO.45 & C) NO. 14/JP/15 THE ACIT, CIRCLE-5, JAIPUR VS. SHRI ASHOK PARNAMI, JAIPUR 6 IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON /04/ 2016. ( LALIET KUMAR ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- / 04 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-5, JAIPUR 2. THE RESPONDENT- SHRI ASHOK PARNAMI, JAIPUR 3. THE CIT(A) II, JAIPUR 4. THE CIT-II, JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 45 /JP/14 & CO NO. 14/JP/15) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR